Why is it that so many businesses fail while so few succeed? Once a business begins to see a downturn, many business owners think it’s time to sell the business or stop completely. Accepting that your business is failing is always a difficult thing to do.
Starting a business is tough, but, closing or shutting down a business can be even tougher. There are many reasons why your business might be failing, from rapidly changing markets to aggressive competition, and each warrants a detailed analysis.
Shutting down or selling your business when it is losing money should be a last resort. Even if your business is seeing some trouble, there’s always a chance to save it before taking a drastic decision to close the business.
Try these five (5) steps before you consider shutting down your failing business.
1. Reduce your expenses
Reducing your costs and expenses will help you stay longer in business. You need to cut out all unnecessary expenses to keep the business afloat. Go back to the budget you had when you started the business, allowing for a little more wiggle room that accounts for the growth you have experience.
Unfortunately, cutting costs may sometimes involve taking some harsh decisions such as laying off of some employees, as it will be better to keep some people employed than for everyone to lose their jobs when the company shuts the doors.
Also Read: Major reason why 80% of startups and new businesses fail.
2. Re-think your strategies
The way you think about your failures is key to your success. After re-evaluating your company, chances are you have found where you went wrong and are ready to redefine and rethink your strategy. This is a great step in reviving your failing business.
Sometimes a failing company might be doing everything right – right product, identifying the right customer base, right pricing but their marketing is not able to convince customers to buy their products. The right way out for this is to evaluate the right marketing mix for your customers with the right message and pitch.
3. Seek external funding
Some business ideas just require a little more push before they break even and become profitable. If your business is dying due to lack of adequate funding, find people who can fund your business. If you can’t find business partners or investors, find those who would wish to help you and save your business by lending you a few funds.
In this kind of situation, banks don’t work because they see it as a risky investment, rather seek alternative sources of funding such as angel investors and VCs. Angel investors and VCs are the backbones of some of the companies such as Facebook and Google. Without them, these businesses might have failed due to lack of revenue in the early stages.
4. Take more business risks
Be prepared to take a few chances and risks. Your business is dying anyway, instead of watching the ship sink, it is good to find a rowboat and save at least a few people who are sinking into the ocean. Try doing whatever you can to save your business. Be prepared to fail, but don’t give up without fighting.
Many business owners believe that during a time of crisis, their best option is to play it safe. This couldn’t be further from the truth. Taking bold risks is often the best course of action to save a dying business. You’re much better off trying new and crazy things than being conservative.
Also Read: Building A Small Business Vs. Building A Start-Up.
5. Pivot or rebrand the business
Pivoting could mean different things to different businesses. To some, it could simply mean changing your business model, while to others it changing the entire product line or target market. This sometimes happens because business owners didn’t properly validate their business ideas or products before launching.
When it comes to rebranding, a rebrand that will successfully jump-start your business isn’t going to be as simple as changing your logo. Your entire brand’s approach to how it positions itself in the market will need an overhaul to see a major impact.
When you know your business is on its last legs, you need to be proactive. Don’t sit back and wait for things to happen before you take action. Take actions that are not only preventative but that also fix glaring problems. There’s no better feeling for an entrepreneur than when he or she is able to turn something around for the better.
Also, don’t let go of your passion for the business. As long as you still the passion in you, you will always look for ways to keep your business alive. Passion is what made you start your business in the first place, and it will help you to keep going. Passion may not always come with the voice of reason, but it may be the fuel you need to reignite that fire.